Land sales nosedive as reality bites

Income uncertainty, Brexit and tighter lending lead to slump in auctions

THE VOLUME of farmland sold at auction declined by 30pc last year.

A survey of 162 successful auctions reveals that 7,736ac of ground changed hands under the hammer in 2016 compared to 10,791ac in 2015. The average per acre price remained relatively stable with a marginal decline of 1.6pc from a figure of €10,152/ac in 2015 to €9,990/ac in 2016.

Reflecting the uncertainty in agriculture, many vendors of land appear to have shunned the auction room in favour of private treaty sales and long-term lease agreements.

Auctioneers and consultants are blaming volatile farm incomes, Brexit and the banks’ tighter lending policies for the flight from the auction rooms.

The new tax breaks for long-term leasing arrangements are also leading to potential vendors holding on to land as a cash-generating asset.

While the national figures are stark there are some notable regional variations with south Leinster showing the greatest decline in the amount of land sold at auction.

While the region recorded the strongest average per acre price of €11,528, the amount of ground sold was down from 3,905ac in 2015 to 2,551ac in 2016, a decline of 35pc.

The neighbouring counties of north Leinster suffered a decline of 21pc in land sales but also saw the biggest drop in the per acre price of land which was down 8.5pc from the €10,098/ac average in 2015 to €9,238/ ac last year.

The price of farmland in Munster recovered from a bad year in 2015 with an increase of 5pc on the average per acre price to €9,512/ac.

However, like other regions, the province experienced a marked decline in the amount of land sold at auction.

The figures in Connacht-Ulster were skewed by the fact that the most lucrative auction of the year took place in that region when Renville House on 135ac near Oranmore in Co Galway sold for €3.2m or €23,700/ac.

Tralee-based consultant and auctioneer Eddie McQuinn said the overall land market was “sluggish with commodity prices on the floor”.

“I wouldn’t dream of putting a farming property up for auction in this climate, it would destroy the sale. Not even farmers with the price of land in their fist and Kerry shares in their pocket are going to jump in and buy land until the economic situation shows some signs of improving,” he said.